On 1 August, Rolls-Royce (LSE: RR.) shares shot up. One cause for this was that the aerospace firm mentioned it plans to renew paying dividends to traders within the close to future.

However what sort of payout are traders taking a look at right here? Let’s check out the newest Rolls-Royce dividend forecasts for 2024 and 2025.

Dividends on the horizon

In its half-year outcomes (posted on 1 August), Rolls-Royce mentioned it plans to reinstate shareholder distributions (dividends) when it pronounces its full-year 2024 outcomes.

It famous that it plans to begin by paying out 30% of underlying revenue after tax with an ongoing payout ratio of 30-40% every year.

Since then, Metropolis analysts have been scrambling to improve their dividend forecasts for the corporate. At the moment, the consensus forecasts are:

• 2024: 4.2p per share
• 2025: 5.6p per share

At right now’s share price of 480p, these estimates equate to yields of round 0.9% and 1.2%.

Forecasts could be off

I’ll level out that traders ought to take these forecasts with a pinch of salt. That’s as a result of analysts’ estimates could be off the mark at occasions (particularly when an organization’s about to reinstate its payout).

However they could be a helpful information. On this case, it’s clear that traders shouldn’t count on an enormous quantity of dividend earnings from the inventory within the close to time period.

When will the money be paid?

By way of the timing of the dividend payouts, I’d count on Rolls-Royce to make its first fee in early July 2025. This may be for 2024.

I’d then count on the corporate to pay a smaller dividend in early January 2026. This may be the interim dividend payout from 2025.

I may very well be unsuitable with this projected timing. However that’s how the corporate’s paid its dividends up to now.

Are the shares price contemplating right now?

As for whether or not the shares are price traders contemplating them for his or her portfolios proper now, I don’t see an enormous quantity of enchantment in them after their monumental transfer greater. The share price is up greater than 450% over the past two years.

Sure, the corporate has vital momentum proper now (it just lately raised its full-year steering), however I reckon numerous that is priced into the inventory already. At the moment, the inventory’s price-to-earnings (P/E) ratio’s 29. That earnings a number of doesn’t go away numerous room for error (eg lacking analysts’ expectations on account of a slowdown within the aviation trade, or a company-specific setback).

Having mentioned that, it wouldn’t shock me if the price was to proceed shifting greater within the brief time period. Sentiment in the direction of the inventory’s actually bullish proper now and the share price is in a powerful uptrend (tendencies can last more than anticipated). And with dividends about to return again, we might even see extra traders pile into the inventory.